Group net profit at the company, which is 47.5% owned by France Telecom
FTE, -2.32%
rose to 616 million zlotys ($251.6 million) in the fourth quarter from PLN381 million a year ago, well above the average forecast of PLN529 million in a Dow Jones Newswires poll of nine telecom analysts. But as expected, the year-on-year improvement was still entirely due to PLN285 million in restructuring costs booked in the fourth quarter of 2006.

Group revenue of PLN4.65 billion in the fourth quarter was down 0.8% on the year, but a touch above analysts' average forecast of PLN4.57 billion.

TPSA shares were stronger early Wednesday on the Warsaw Stock Exchange following the results, and at 0915 GMT were trading up PLN0.89, or 4.2% higher, at PLN22.28, far outstripping a 0.2% rise in the WIG20 blue-chip index. The share has been under pressure in the past year due to market deregulation and increasing competition.

"TPSA posted good results, but that's something the market expected," said Michal Janik, an equities analyst at DM PKO brokerage house in Warsaw. "I'd rather pay attention to a significant slowdown in revenue declines. That's really optimistic," he said.

For all of 2007, TPSA posted a consolidated net profit of PLN2.28 billion, of which PLN2.27 billion was attributable to shareholders of TPSA. That's up from PLN2.09 billion a year earlier. The company generated PLN18.24 billion in revenue, down from PLN18.625 billion in 2006.

TPSA met its full-year revenue target, as the 2.0% annual fall in TPSA's top line was less than the company's most recent guidance of a 2.8% decline.

For 2008, TPSA said it expects a 1% fall in revenue due to growing competition in the telecommunications market.

TPSA's 2007 gross operating margin for the full year was 42.3%, just down from 42.4% over the first three quarters and within the company's guidance range of 42% to 44%.

The mobile segment again provided the bulk of sales growth, as TPSA reported net mobile revenue rose 9.5% in the fourth quarter. For the full year, mobile revenue was up 7.1% to PLN8.06 billion. Fixed line revenue fell 11.5% to PLN7.83 billion.

TPSA said mobile operations accounted for 39% of the group's operating margin in 2007, compared with 35% in 2006.

TPSA mobile arm Centertel had almost 14.2 million subscribers at the end of December, up 13% on the year and much better than its end-2007 target of 13.5 million.

Broadband revenues in 2007 were up 5.1% on the year, to PLN1.23 billion. TPSA said the dramatic slowdown from 20.3% annual growth in 2006 was due to slower growth of the overall market and especially rising competition from other broadband Internet providers following market deregulation.

The number of broadband subscribers rose by 26% on the year, to 2.15 million. TPSA had targeted 2.2 million broadband subscribers by the end of 2007.

Capital expenditures were 20.2% of group revenue, ahead of the 2007 guidance of 16% to 19% as TPSA said it moved forward some investments planned for 2008. As a result, the company said it expects this year's capex to account for only 14% to 16% of group revenue.

The company's bottom line also benefited from lower debt, which cut interest and financial costs to PLN452 million in 2007, from PLN452 million in 2006.

TPSA will propose a 2007 dividend of PLN2.01 per share, including an ordinary divided of PLN1.50 per share, up from PLN1.40 in 2006. The remaining PLN0.51 will come from the share buyback program completed last year.

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